Challenges for Boeing’s New Boss

Dennis Muilenburg takes over as Boeing CEO on July 1 after the decade-long rollercoaster ride for the aerospace and defense group under Jim McNerney. Muilenburg’s challenge? Delivering on Boeing’s half-trillion order backlog. Here’s what you need to know.

At 51, Muilenburg could oversee one, maybe two spins of the now-booming and highly-cyclical commercial jet business before hitting Boeing’s mandatory retirement age. Time enough to decide when to build an all-new jetliner and whether to shrink or expand its defense business. Tough choices loom.

Boeing’s Missouri-based defense unit needs a big win. Securing the upcoming $80 billion U.S Air Force bomber contract up for grabs this summer or a $10 billion trainer-jet deal could stop engineers defecting from the unit that Mr. Muilenburg used to head. Failure could mean change to a $30 billion business that’s a counterweight to commercial jet sales.

Boeing shares, down from highs earlier this year, are still up 124% since July 2005 when McNerney became CEO, outperforming the Dow and the S&P 500. But shares in jet-making rival Airbus Group have more than tripled over the same period, Lockheed Martin stock has gained 207%. Shares in General Dynamics, the closest peer with its big Gulfstream commercial aerospace arm, rose 152%.

Muilenburg takes up the reins on July 1, International Joke Day, but possibly also the first day without the “Boeing Bank.” The US Ex-Im Bank, to use its more formal name, backs some 15% of Boeing’s commercial jet deliveries to foreign airlines much to the annoyance of their U.S. rivals. The bank is likely to go into limbo that day as Congress considers its future. Mr. Muilenburg is confident the bank’s charter will be renewed. Boeing says it’s ready to spend more of its own money to support sales.

No need to ask, he’s a smooth operator. Mr. Muilenburg has taken a prominent role at investor conferences and industry events such as the recent Paris Air Show, part of his grooming for the top job. Investors are looking for a potential change in tone after Mr. McNerney’s glass half-full approach that’s led to gaffes that soured relations with union leaders.